Pre-approved but no offset acc!

Hi all, i have recently been pre-approved for a loan (money saver - ANZ). But problem is, i just realised that it does not come with an offset account. I have some savings that i think would be good to park in the offset account. Do you guys think i should just go ahead and take the first step (first IP) and stop worrying about the details?

I still think it would be good to get one with an offset account, but have been told by broker it would come with a much higher IR and more charges p.a, apparently called a pro package or something with the same lender.

Need some feedbacks! Cheers!

Regards,
extradry

 

Extradry

I think you should go for the pro pack
It does have slightly higher IR but you get a discount and this brings it down to below standard variable.
Those come with an annual fee of $300-$400 (depending on lender) but there are no other fees and I believe it includes a free credit card.

btw, I have little faith in the ANZ preaprovals I had those twice and both times they refused to lend me money the normal way.
On 1 occasion they wanted me to pay LMI when I had the 20% deposit.
Ofcourse I took my business elsewhere and don't bank with them anymore.

Also, consider their recent financial troubles, in order to reduce their losses they will probably milk their customers, i.e you.
I believe they already have the highest interest rate of all major banks..

Cheers

Edit: btw, my ANZ experience was over 10 years ago at at a time when 100% offset accounts were only available by ANZ and Citibank.

 

Thnaks for your feedback BV. But generally speaking though, would one expect the interest rate to be higher if it comes with an offest account? I would have thought a loan with an offset account is quite common these days. I mean with my broker, he is suggesting a diff package but with the same lender. There must be some other lenders with a lower rate and an offset account.

 

Hi ExtraDry,

Nowadays they have different loans available to suit most needs.

If you want the plain vanilla loan, P&I only, no frills, no offset, nothing else some banks won't charge you any monthly "admin" fees.

If you want something with a bit of flexibility (ie, packaging with offset a/c, credit card, etc) you'd usually get a package which is one annual fee (usually a few hundred per annum).

You'll find that most banks do 100% but always double check

Cheers,

Dan

PS Before getting a loan speak to your licensed mortgage broker.

 

The money saver loan is a no frills loan and as such it has a lower than standard interest rate. I looked on their website and it is 8.77% (although I think it went up recently).
If you choose to take a different type of loan with an offset it will be 9.37% minus your discount of - 0.7% (if you borrow over $250K) = 8.67% which is similar to the money saver loan.
Other banks also offer loans with 100% offset and from what I know they charge the standard variable rate minus any discounts.
Cheers

 

The problem i have at the moment is the size of my loan. As this is my first IP, my loan would be less than $200k (lo-doc loan as well). Therefore, I would not be entitled to any discounts. I have just contacted my MB, and he has advised me that if i have any surplus funds, i can make prepayments into the loan and redraw it when i need it. He mentioned this is also like an offset account.I do not really understand this part. Can someone advise me on this? Does he mean a LOC when i need the money?

Regards,
extradry

 

Indeed dump the MB and find a good one... A loan with a redraw and one with an offset account ARE TOTALLY SEPERATELY THINGS... a redrew is terrible for deductibility and offsets are perfect....

Have a search and it will explain the differences, but basically with a redraw, every time you put money and and take it out, it creates a new loan with is usually non deductible. Therefore less tax deductions and a huge load of work for your accountant (which means $$$s).

 

That is what im contemplating at the moment. Had a look at the redraw facility and it does seem to be different to an offset account. Did not know about the tax deductibility though...so thanks DaveA!! I have a pre-approval with him now, does that mean that if i go with a differnt broker i have to withdraw from this pre-approval? Or can i just get another pre-approval with the new MB? Just want to get it right with my first IP.

 

Extradry,

Tell the guy what you want, if he can't get it then move on.
Don't you have any income?
See a different lender, walk into a branch of the Bank of SA and see the lending manager there and explain what you want to do.

Cheers

 

dont have to redraw, however it will be logged on your credit file...

this isnt a bad or good thing in itself. If you can play it off saying your looking for a better deal it can be good, if they see it as you didnt fit there criteria then it can be bad...

a good mortgage broker can get around it though

 

I've asked the MB about other loans with offset acc, but his reply always seemed to be -extra charges p.a, -due to loan size no discounts so not worth it. Ive asked twice, so now i'm thinking either there are no other loans that suits me due to lo-doc (???) or he is not looking hard enough...might be wrong on this. But i'm confident i can still find something better. Might start calling some other MB again to see what other loans they can offer. But for now, i'll probably leave the pre-approval as it is until i find a better deal.

Regards,
extradry

 

Hi ExtraDry,

Did you walk into your local BankSA like BV suggested or any other bank?
It would be interesting to compare what a MB says to a bank lender...

Cheers,

Dan

 

Hi again all, i've managed to find another broker who has come up with a loan with an offset account. The rate is a little bit higher but it would be worth it, after offsetting with my savings. So all working out now. Most likely will go with this one.

AsxBroker: No i didnt speak to BankSA or any other banks. Prefer to deal with MBs as they have access to all lenders plus they are commission based, so they would go all the way to help out. Plus, most MBs would have dealt with lending managers before so easier that way too!!

 

Good work

plus they are commission based, so they would go all the way to help out.

Yes that's right, it's amazing how many people don't like commission based payments, yet exactly like ExtraDry said, "they would go all the way to help out."

Cheers,

Dan